We've put three quarters behind us in 2009, and the most recent one was merely another miserable step downward for the beleaguered newspaper industry. Total ad revenue plummeted in the third quarter to $6.4 billion for the print jockeys, a decline of 28%. This info from the Newspaper Association of America drives home the notion that conditions will only worsen for the newspaper industry. So, if you're hoping those shares of New York Times Company (NYT), Gannett (GCI) and Washington Post Company (WPO), holding your breath will leave you little more than dizzy.
Of the total advertising revenue generated in the third quarter of 2009, $5.8 million came from print, the lowest quarterly amount this year. The $623 million in online advertising sold by America's newspapers was also 2009's worst. Both are down substantially from the same quarter in 2008, when the newspapers posted print ad revenue of $8.2 million and online ad revenue of $750 million, according to NAA data. At this time last year, we lamented year-over-year declines approaching 20%. Now, we have the same feelings as ad revenue drops approach 30%.
For the last 13 quarters, the industry's aggregate ad revenue has fallen, and Q3 was the eighth in a row in which the industry suffered double-digit drops.
The print ad revenue trend is not unexpected, but the death knell is sounded by the suffering online ad revenue performance. The newspapers still can't figure out how to make online revenue a meaningful portion of their total ad revenues... and they can't figure out how to make this category grow. Online ad revenue hasn't increased since the end of 2007.
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Reader Comments (Page 1 of 1)
11-20-2009 @ 6:49PM
jason said...
If they would lower their ad prices it might hang on. It's just so expensive for the little guy entreprenaeur
11-24-2009 @ 4:48PM
Lee said...
But what are the papers' profit margins? I keep reading how much their revenues are down. OK, but so are their costs. Way down.
Maybe the days of 20-percent margins are over, but if they level off at an average of 8-9 percent (like most American companies) why would they die? They're still making money, n'est pas?
11-24-2009 @ 6:42PM
Tom Johansmeyer said...
Lee, to a certain extent, healthy margins are all you need, but eventually, revenue declines can't help but erode margins. After all, you can't cut costs past zero. And, not all costs are variable with circ; fixed costs can be pretty nasty in a declining revenue environment. Thinner margins may be sufficient, though not what investors are used to, but it looks like even small margins may be in jeopardy, given the speed of the revenue decline.